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Discussion Starter · #1 ·
Hi, I have a property up for sale. My accountant figured II’ll have a $70k capital tax bill to pay if it sells.
At the moment, I’m down about $100k in my portfolio (from my original investment) I’m wondering if I sold everything that is non-registered and create a loss, can I use that loss to offset the capital gain from the property? It wont be all the $100k because some of that is in TFSA and RRSP.
I just which I’d thought of this about a month ago when I was down a lot more.
Thank you for any replies.
 

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Hi, I have a property up for sale. My accountant figured II’ll have a $70k capital tax bill to pay if it sells.
At the moment, I’m down about $100k in my portfolio (from my original investment) I’m wondering if I sold everything that is non-registered and create a loss, can I use that loss to offset the capital gain from the property? It wont be all the $100k because some of that is in TFSA and RRSP.
I just which I’d thought of this about a month ago when I was down a lot more.
Thank you for any replies.
Yes you can create a capital loss by selling your non registered investments, the loss of which, which can be used to offset the property capital gain. Just remember you must wait 30 days before repurchasing identical investments.
 

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What is the nature of the property? If it is personal use property you may want to premptively investigate, before selling any stocks, whether losses from your investment account can be used against personal use property gains. I don't definitively know the answer but I do know that personal use property losses cannot be used against investment gains, but the sale nevertheless must be reported to CRA. ( I have recently sold, at a small loss a piece of personal use property).

TaxTips.ca - Capital Gains and Losses
 

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Discussion Starter · #7 ·
Yes you can create a capital loss by selling your non registered investments, the loss of which, which can be used to offset the property capital gain. Just remember you must wait 30 days before repurchasing identical investments.
Thank you for your reply
I’m aware of the 30 day rule but I wonder if you might know this.
If I’m in a 60/40 type portfolio that my Advisor has “custom” designed, then I buy Vbal (for example), if vbal has many of the same individual stocks as my custom portfolio, is that ok?
Or, to be even simpler, if I’m in vgro, and sell it for a loss, what happens if I buy vbal. I haven’t looked that closely but I think I read that vbal and vgro have the same stocks but in different proportions.
 

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What is the nature of the property? If it is personal use property you may want to premptively investigate, before selling any stocks, whether losses from your investment account can be used against personal use property gains. I don't definitively know the answer but I do know that personal use property losses cannot be used against investment gains, but the sale nevertheless must be reported to CRA. ( I have recently sold, at a small loss a piece of personal use property).

TaxTips.ca - Capital Gains and Losses
Completely incorrect. Gains on personal use property can be offset by capital losses on sale of investments. Example- a few years I had a large capital gain on the sale of a personal use property (vacation condo). Capital losses on the sale of some investments helped cushion the tax bite.
 

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If I’m in a 60/40 type portfolio that my Advisor has “custom” designed, then I buy Vbal (for example), if vbal has many of the same individual stocks as my custom portfolio, is that ok?
Let's say you are already in some kind of 60/40 portfolio. Yes you can sell that and immediately buy VBAL or XBAL, also a 60/40.

Even if they hold many of the same things, they will not be identical properties. You should be able to use the capital loss.

What you'll want to do is take a close look at your current asset allocation (figure out what % are in stocks, % in bonds, and the Canada vs global breakdown) and find the best fit among things like, VBAL, XBAL, ZBAL, VGRO

You will find that none of these are a perfect fit or perfect replacement for your existing holdings. There is some risk involved and you are changing your investments (somewhat), which is why they are not identical properties.
 

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Completely incorrect. Gains on personal use property can be offset by capital losses on sale of investments. Example- a few years I had a large capital gain on the sale of a personal use property (vacation condo). Capital losses on the sale of some investments helped cushion the tax bite.
Not "Completely incorrect" I never stated the OP couldn't. It was just something I suggested the OP get advice on/clarify. What is it about the second part of my statement that personal use property losses can't be used to offset investment gains that you find "Completely incorrect"
 

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Hi, I have a property up for sale. My accountant figured II’ll have a $70k capital tax bill to pay if it sells.
At the moment, I’m down about $100k in my portfolio (from my original investment) I’m wondering if I sold everything that is non-registered and create a loss, can I use that loss to offset the capital gain from the property? It wont be all the $100k because some of that is in TFSA and RRSP.
I just which I’d thought of this about a month ago when I was down a lot more.
Thank you for any replies.
Yes, capital losses can be used to get rid of the capital gain from the property.

The TFSA and RRSP won't help as they don't capital gains. For the non-registered, hopefully you realise that only the investments that are in a capital loss position should be sold. If you sell the entire portfolio then whatever is in a capital gain position is going to increase the capital gains being reported.

Another thing to check is whether you have capital losses from previous years that CRA already knows about on previous tax returns.

If so, these already recorded capital losses can be used without having to sell any of the current investments.


Cheers
 

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Another thing to check is whether you have capital losses from previous years that CRA already knows about on previous tax returns.
Good point. You should be able to see these on your Notice of Assessment.

These carried-forward capital losses are not automatically applied by the CRA. One has to explicitly claim the credit on line 25300 as your link described.
 

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@Mjdy2k You are likely on top of this but just in case; In your initial post up thread you mention a "bill" of $70k. It's worth clarifying if this is the gain you are trying to shield or the estimated cash tax bill (which is 1/2 of the gain times your marginal rate). If it is the estimated tax that will be owed you will likely need a loss of considerably more than $100K to shield the gain.

Also, keep in mind any tax owed will not need to be paid until next April (unless you are currently paying instalment taxes).
 
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